Notional interest on buyer advances is includible only when a direct nexus with price fixation is proved.

Notional interest on buyer advances is includible in the assessable value of tailor-made machines only if the department establishes a nexus between the advances and the fixation of price. The burden remains on the department to prove that the advance had a direct bearing on price composition; mere difficulty in proving that nexus for tailor-made goods does not dispense with that requirement. On the facts, no such nexus was shown, so the notional interest was held not includible in assessable value and the appeal was allowed.

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Issues: Whether notional interest on advances taken from buyers was includible in the assessable value of tailor-made machines.

Analysis: The dispute turned on whether the department had established a nexus between the advances and the fixation of price. The governing principle, as applied, was that notional interest on advances can be added to assessable value only where such nexus is shown. On the facts, the department failed to discharge that burden, and the mere difficulty of proving nexus in the case of tailor-made goods did not relieve it of that obligation.

Conclusion: The notional interest was not includible in the assessable value, and the appeal was allowed.

Ratio Decidendi: Notional interest on buyer advances is includible in assessable value only when a nexus between the advance and the price composition is established by the department.

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